AER Urged to Cut 'Hundreds of Millions' from Your Power Bill: Focus on Network Charges

Australian households and small businesses could see hundreds of millions of dollars returned to their pockets if the Australian Energy Regulator (AER) acts on calls from consumer advocacy groups to reduce what are being described as “unnecessarily high” network charges. This week, as the AER progresses its 2026 Rate of Return Instrument (RORI) review, the spotlight has been firmly placed on the significant portion of energy bills dedicated to poles and wires infrastructure.

Energy Consumers Australia (ECA) is at the forefront of this advocacy, urging the AER to make crucial adjustments to its RORI draft, initially released in May. The ECA contends that there are “hundreds of millions” of dollars that could be directly returned to consumers by re-evaluating the costs allocated for energy network investments.

“More than a billion dollars of consumer’s hard-earned money is being poured down the energy network drain.” — Brendan French, CEO, Energy Consumers Australia

Network charges represent the costs associated with building, maintaining, and operating the electricity transmission and distribution networks – the poles, wires, and substations that deliver power to homes and businesses. These charges typically constitute a substantial 40% to 50% of a customer’s total electricity bill. This makes them a critical area for potential savings, especially as other components of the energy market, such as wholesale electricity prices, have shown signs of easing.

The AER’s RORI is a complex regulatory instrument that determines the rate of return energy networks are allowed to earn on their infrastructure investments. This, in turn, directly influences the network charges passed on to consumers. Advocates argue that the current framework may be allowing networks to recover more than is truly necessary, burdening consumers with inflated bills.

Consumer Pain Points Highlighted

The push for reduced network charges comes amidst growing concern over energy affordability across Australia. A CHOICE survey conducted in March 2026 revealed that 78% of Australians were concerned about the cost of electricity. Furthermore, the Consumer Action Law Centre has noted that unaffordable energy bills are a primary reason individuals seek financial counselling, with the amount owed on these bills steadily increasing and becoming increasingly difficult to manage.

This sentiment is echoed by the recent trend of higher fixed daily supply charges appearing on electricity bills, a component directly linked to network costs. Readers interested in understanding these charges can refer to our guide: Why Your 2026 Electricity Bill Has Higher Fixed Charges (Up to $1.66/Day).

The Regulator’s Mandate and Future Outlook

The AER’s stated objective is to ensure a reliable and secure energy market where consumers “pay no more than necessary for energy to their homes and business.” The current advocacy by ECA and other consumer groups directly challenges whether this mandate is being met regarding network costs.

While wholesale electricity prices in the National Electricity Market (NEM) saw significant reductions in Q2 2026, dropping by 47% from the same period last year to an average of $74/MWh, these savings do not always fully translate to retail bills. This discrepancy further highlights the impact of other regulated charges, such as network costs, on the final price consumers pay. Victoria, for example, experienced the largest fall in wholesale prices, down 60% to an average of $56/MWh in Q2 2026.

The AER’s final conclusion on the RORI review is anticipated in December 2026. This decision will be crucial in determining whether the arguments presented by consumer advocates lead to tangible reductions in network charges, offering long-awaited relief to Australian households and businesses struggling with energy costs. Until then, consumers are encouraged to actively compare energy plans and consider energy-saving measures to mitigate ongoing expenses. For more information on navigating the market, our guide on Energy Plans No Lock-In Contracts Australia 2026: Complete Guide may be helpful.

Impact on Different States

Network charges vary by state and network service provider. The AER’s RORI determination influences all regulated networks across the NEM (New South Wales, Queensland, South Australia, Victoria, and Tasmania). Therefore, any changes resulting from this review would have a broad impact on energy bills nationwide.

For instance, while South Australia’s residential flat-rate Default Market Offer prices increased by 1.4% from 1 July 2026, time-of-use customers in SA did see a 1.1% decrease. These state-specific outcomes are influenced by a combination of wholesale, retail, and, crucially, network costs. Reducing the network component could offer more consistent relief across all tariff types and states.

As the December deadline approaches, all eyes will be on the AER to see if it delivers on the promise of ensuring Australians pay no more than necessary for their essential energy services.